Further tightening its financial sanctions against Russia for invading Ukraine, the European Union has announced a complete ban on crypto payments to Moscow.
“The existing prohibitions on crypto assets have been tightened by banning all crypto-asset wallets, accounts, or custody services, irrespective of the amount of the wallet (previously up to €10,000 was allowed),” the European Commission said in an Oct. 6
press release. The new measures have been introduced as part of the eighth package of sanctions and will thus cease all crypto payments between Russia and the European Union.
The ban came into effect on Thursday. The only Russian entities and residents allowed to procure services of European crypto providers will be those who live or operate in the EU bloc.
The new EU move comes as Russian officials have decided to allow cross-border settlements in cryptocurrencies. The Russian central bank and the Ministry of Finance have “as a whole” agreed on a bill to this effect, according to a
report by Russian-based publication Kommersant.
Russia is also planning to launch a digital ruble next year and use it for mutual settlements with China. In an
interview with Russia’s parliamentary newspaper last month, Anatoly Aksakov, head of the financial committee in Russia’s lower house of parliament, pointed out that digital currencies will allow for financial flows that bypass systems controlled by nations hostile to Russia.
“If we launch this, then other countries will begin to actively use it going forward, and America’s control over the global financial system will effectively end,” Aksakov said.
Funding War With Crypto
An Oct. 7
report by TRM Labs, a digital asset compliance and risk management firm, identified pro-Russian groups collecting donations in cryptocurrencies to fund Moscow’s war against Ukraine. As of Sept. 22, such groups have raised roughly $400,000.
An analysis of Telegram posts revealed that the collected funds are used to support combat training close to Russia’s Ukraine border as well as buying supplies for militias affiliated with Moscow.
One of the paramilitary groups collecting donations is Task Force Rusich, a Russian entity sanctioned by the U.S. Treasury’s Office of Foreign Assets Control (OFAC). Since the beginning of the Ukraine invasion, Task Force Rusich has collected more than $144,000 in funds.
In an
interview with CNBC, Ari Redbord, head of legal and government affairs at TRM Labs, said that such pro-Russian groups are likely using crypto exchanges that might not be complying with anti-money laundering and other similar regulations.
“They’re probably using non-compliant exchanges to off-ramp those funds [into fiat currency],” Redbord said. “And you can do that. You just can’t do that at scale. And I think that’s where ... we’ll say, will there be more? Of course, there’ll be more. But will it be billions of dollars? Highly unlikely.”
